Can I Do Business Without Registering: Everything to Know
If you've been wondering, "can I do business without registering," the simple answer is no. However, there are some advantages when you register your business.3 min read
If you've been wondering, "can I do business without registering," the simple answer is no. However, there are certain benefits to registering your company with the appropriate authorities that you may want to take advantage of.
Can You Use Your Company's Name If It Hasn't Been Registered?
Limited liability companies, otherwise known as LLCs, have become a popular business structure due to their:
- Limited liability protection for LLC members
Many business owners choose to register their new companies as LLCs, but it's actually not a requirement to do so to conduct business.
On another note, every great company also has a great name. Think about it. All of the companies that have a product or service you recognize have equally recognizable brands:
You're likely excited to create an equally viral name for your own business, and that's not a bad thing since this is a great way to build your company's brand. The question at hand, though, is whether or not you are able to use your business name before it's been registered. The simple answer is, if you haven't registered with the Secretary of State, you can only do business in your own name. If you do offer a product or service in exchange for any kind of payment and you have not registered, you automatically become a sole proprietorship.
It is entirely legal to operate as a sole proprietorship without registering your company. Keep in mind, however, that doing so does not provide you with any form of legal protection if you experience debt or face legal action. You can't legally use any business name until you have registered it as an officially recognized business entity, both with your local state authorities and with the Internal Revenue Service.
Becoming recognized as a business by the Internal Revenue Service does not require any special steps or documents. All you need for IRS recognition is that you file your first business tax return, as required by federal law.
How to Register Your Business
There are a few steps you'll need to complete to successfully register your business:
- Choose a business structure
- Register with the appropriate local authorities
- Obtain required licenses and permits
The limited liability company is just one of several business structures that you, as a new business owner, have to choose from when setting up your new company. The LLC structure is not always the best fit for every new company. Other business structure types include:
- Sole proprietorship
- Limited partnership
- General partnership
Each structure has its own benefits and drawbacks in areas such as:
- Liability protection
- Documentation requirements
It's a good idea to get help from a lawyer that has knowledge and experience pertaining to business as well as a certified public accountant when deciding which business structure to adopt. They can help make sure the choice you make provides optimal benefits in terms of limited liability protection and tax benefits while keeping operational costs as low as possible. Forming certain types of business entities provide you with the ability to keep your business and personal assets separate and protect you and your family from the negative effects of things like:
- Legal action
- Any other issues pertaining to financial difficulties that your business might face
Certain business structures, such as partnerships, S- and C-corps, and LLCs, will help to:
- Establish that you are the first person to use your chosen business name
- Prevent another company from using the same name in the state you operate in
These structures will also enable you to obtain funding from sources such as:
- Angel investors
- Venture capitalists
- The Small Business Administration
Most capital sources are hesitant to entertain presentations by business owners who have not bothered to register their company as an officially recognized business. If you have come up with a great name for your business, you're going to want to start using it as soon as possible as the central focus of your branding and marketing efforts. However, this isn't an option until you have taken steps to register your company with the appropriate authorities in your state.
If you need help with can I do business without registering, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.